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The Rise and Fall of a Multimillion-Dollar Airbnb Scheme
- alexandercrohde 8y agoI don't like how the article implicitly takes the city's side. Breaking monopolies is usually a good, just like uber and taxis.
- duxup 8y agoIs there a monopoly to break? Are all hotels in NY owned by the same group? There are other issues as well of course, that Airbnb guests (and the owners) who are running a hotel don't care at all if their guests bother the neighbors, leave trash outside, etc. It might be New York City, but it's also a community deciding how things are laid out and work, how they gather taxes, and etc in their city.
- golemiprague 8y agoI think what he wanted to say is to break regulations and zoning. Cities are too strict and Airbnb showed that it doesn't have to be that way, things kind of sort out themselves
- notmyaccount 8y agoIf all the hotel, taxi, etc. owners group up to create a cartel to keep the status quo and not to disrupt the market, then that is also not exactly good. The choice of a community does not necessarily mean that it is the right choice.
- duxup 8y agoIs what you're proposing, actually the case as far as hotels goes?
- notmyaccount 8y agoI mean declaring a property to be short term rentable is much harder than it ought to be. This is what the hotel association NYC has spent years lobbying for. So something new like AirBnB cannot harm their market. AirBnb definitely solves a problem and generally at a much cheaper price. We need to update our laws to let it do that in a sustainable manner. Edit: Corrected rentable to short-term rentable
- duxup 8y agoWell renting, and a hotel type "renting" are way way different. I'm not really sure there is a "problem" here. It's the locals who get to decide if their laws need updating or not. I'm willing to be a ton of Airbnb guests is not what the locals want.
- gamblor956 8y agoI mean declaring a property to be rentable is much harder than it ought to be. This is what the hotel association NYC has spent years lobbying for. So something new like AirBnB cannot harm their market. Simply false. These are the steps involved in "declaring" your property to be rentable: Step 1a: If you rent your place, ask your landlord for permission. Step 1b: If you live in a condo building, ask your condo association for permission. Step 1c: If you own your own house, ask your spouse for permission. Step 2: Put an ad on Craigslist advertising your rental. Step 3: There is no step 3. Declaring a property to be rentable is literally a trivial exercise unless you're going for short-term (aka "transient" or "hotel") rentals.
- notmyaccount 8y agoTotally my bad. I used the wrong word rentable, whereas I meant to write short-term rentals. For example, if I own a single-family home, my ability to rent it out is restricted by zoning rules. I would have to look up the Certificate of Occupancy and potentially make changes if I intended to rent my place out. It could even mean involving an architect because the building would have to meet the structural requirements for a rooming house. There are lots of redtapes.
- deleted 8y ago[deleted]
- notahacker 8y agoI'm not convinced the people with resources to make $20m in hotel revenues from 18 shell corporations are the little guy being stamped on and the neighbours being buzzed by people wanting hotel service are the Big Bad Corporation here...
- notmyaccount 8y agoI am not saying that they should go on breaking the laws. The laws are clear. But at certain times, the laws have been deliberately lobbied to create a hindrance for any new players in the market. Like in this case, applying for a permit to rent out apartments should have been much easier than the current cumbersome process is. Like NY Taxi Medallions. Before Uber, Lyft or other ride-sharing apps, there was only 13,587 yellow cabs in the city of 8.5 million people. Currently, there are an estimated 100,000 cabs in the city which resulted in a drop of medallion prices from $1.4 million in 2014 to just $140,000 now. It was an artificial bubble created by the taxi drivers community (and government) to keep the medallion price inflated. It is easy to see why they were against ride-sharing apps. Or California housing zones. We all know that California has a housing crisis and one of the potential solution is to have multi-story buildings. For that, we need easy rezoning of residential zones to allow multi-story building redevelopment. However, most of the community members refuse to allow for that since it would bring down the rent and property prices. So the community is not interested in allowing easy development of multi-story buildings.
- jacques_chester 8y agoBreaking the law because you find it morally repugnant is one thing. Breaking the law for a buck is a very different thing.
- notmyaccount 8y agoHaha. I mean yes I kinda agree with what you said.
- greenyoda 8y ago> Like NY Taxi Medallions. Before Uber, Lyft or other ride-sharing apps, there was only 13,587 yellow cabs in the city of 8.5 million people. Before Uber, yellow medallion cabs were certainly not the only taxis available in NYC - they're just the only ones that can be legally hailed from the street. There have always been lots of car service companies in NYC that you can call to request a taxi. Some of these even offer online booking.
- rootusrootus 8y agoIf not the community itself, who do you propose gets to determine what the right choice is?
- notmyaccount 8y agoYou have to look at the overall benefit, not just the benefit of the local community. I gave certain examples why the community choice might be due to their own selfish reasons in the reply to comment above yours.
- rootusrootus 8y agoI am still confused what exactly you propose. Who gets to determine overall benefit? Don't we have communities for this exact reason to begin with?
- pmichalina 8y agoIt’s not “the community”. It’s a bunch of loud mouthed busy bodies and bureaucrats flexing their authority because it gets them a hit of that dopamine.
- duxup 8y agoYou mean elected officials? It's certainly not the neighbors who want this.
- dehrmann 8y agoThe part that I wish someone would break is hotel/tourism tax. It's a tax that locals rarely pay, but visitors pay all the time, and since visitors don't vote where they visit, it's a form or taxation without representation.
- duxup 8y agoI get what you're saying, but any travel would then be " taxation without representation". Ultimately the locals have to be the ones to make the call on local taxes. I get what you're getting at but I'm not sure I see a good way around that. Folks who can't vote on local taxes, tax free? Everyone would just shop the next town or state over.... I think that's just too expansive of a view on taxation and representation to make sense.
- Swizec 8y ago> it's a form or taxation without representation. Immigrants, even permanent residents, pay all the taxes and have none of the representation. Felons too (while in prison and up to 2 years after). I have a feeling “taxation without representation” stopped being an applicable argument as soon as USA won the independence war.
- gamblor956 8y agoImmigrants and permanent residents have representation, as do felons. Congresspeople represent all the residents of their district, not just the citizens. While non-citizens are not allowed to vote on their choice of representative, they are allowed to call their local congressperson and express their opinions on upcoming legislation, and can volunteer in political campaigns. Permanent residents are also allowed to donate money to political campaigns. At least in CA and NY, non-citizens do regularly take advantage of their rights within the US political system.
- hn_throwaway_99 8y agoI don't think "taxation without representation" means what you think it means. This city is run by and for the benefit of New Yorkers; if you don't like it, don't visit. Presumably of they try to charge more than visitors are willing to pay they would lose tourist dollars.
- deleted 8y ago[deleted]
- smallgovt 8y agoI can't help but feel bad for this guy. The city will try to make an example out of him while all the other rule-breakers will get off scott free. There are hundreds if not thousands of other business schemes just like this one going on right now on Airbnb.
- kirse 8y agoAlways interesting to see when the disruptor becomes the disrupted (AirBnb's One-Host One-Home policy), and then suddenly bending the rules is an issue. You'd figure AirBnb would remember their days of being a rebellious teenager and provide legal assistance to these enterprising disruptors. Then again, maybe there's an AirBnb shell corp legal defense fund.
- duxup 8y agoI'm not sure there is much legal support that would change much. Unless they can somehow get someone decide that the laws in question don't apply or are not appropriate laws.
- jimrhods23 8y agoI don't really thing what this guy did was a bad thing: He had positive reviews, multiple maids to cleanup after guests, and willingly broke leases and lost money when there were complaints.
- ceejayoz 8y agoYou'd probably feel differently if you were these folks: > “It’s been 3 a.m. and I’ve had people ringing my buzzer to get in,” said Ziograin Correa, 40, who lives in the building with his wife and six children. “They don’t have a key, so they ring my buzzer.” The other residents in the buildings can't leave an AirBnB review.
- jimrhods23 8y agoThis has happened at my apartment complex when my neighbors invited some friends over. The residents have something even better: they can complain to the landlord.
- jacques_chester 8y agoOn the description it appears that he and his partners (a) broke the law (b) broke his contracts with AirBnB and (c) took extraordinary measures to conceal (a) and (b) from legal scrutiny. Those are all, by and large, "bad things".
- jimrhods23 8y agoHe violated new york regulations and an end user agreement. Nobody was hurt and from the sounds of it, he worked very hard to please his customers. There will be fines involved, because NYC wants their cut of the profits. I still don't consider what they did as 'bad things'.
- jacques_chester 8y ago> Nobody was hurt First: You don't know that. In fact the neighbours would disagree. Second: laws are intended to be preventative. Some of them are to prevent the bad outcome (manslaughter is illegal), some of them to prevent things that commonly lead to a bad outcome (campfires in my bedroom are illegal). If I build a campfire in my room and this time it doesn't destroy my building, that doesn't excuse me in law or ethics. I still did a dangerous thing, knowingly and recklessly. > There will be fines involved, because NYC wants their cut of the profits. There are fines involved because NYC operates, even its own gloriously half-arsed way, under the rule of law.
- matchbok 8y agoMore bad behavior that is encouraged by the AirBnb leadership. Disgusting. They could solve this problem overnight with their software but choose not to because it makes ~70% of their revenue, while at the same time claiming they are a "home-sharing" site. AirBnb needs to go into the trash. They consume resources and push costs onto the community and neighbors, while making millions.
- pmichalina 8y agoPeople using it would beg to differ. Just don’t use their service.
- lordnacho 8y agoWhy doesn't the city just make a law that fines Airbnb if they offer something they don't like? Is that impossible or did I miss it?
- tnolet 8y agoNo, Paris just fined AirBnB $14M.
- ddebernardy 8y ago... which (unfortunately?) is a rounding error for AirBnB.
- crowbahr 8y agoIt is, but they could continue to do it. Losing 14M a year on a market could be a problem eventually. Especially if the fines increase with recurring issues.
- ErikAugust 8y agoNo paywall, no JavaScript, reduces page load ten fold: https://beta.trimread.com/articles/127 https://beta.trimread.com/articles/127
- jacques_chester 8y ago> Airbnb condemned the exploitation of its platform Actions -- or inactions -- speak louder than words.
- ryanmarsh 8y ago“We’re not criminals,” he said at his lawyer’s office, while puffing from a Juul he kept in a black leather pouch fastened to a chain around his neck. He shrugged: “I don’t own a yacht or a big penthouse.” So you’re only a criminal if the haul is large?
- CodeWriter23 8y agoNo. What he’s saying is NYC focuses on prosecuting criminals like him who don’t have Wall St. level financial and legal resources to fight back with.
- jakelarkin 8y agofinancial illiteracy is a real problem in journalism. You can't really judge how egregious/successful these guys were without knowing the annualized NET revenue of this business.
- kaikai 8y agoI'm sure that will be a hot topic during the trial
- astura 8y agoAnd we don't even know if those numbers have been released to the public yet. (they probably haven't since expenses take a while to compile, whereas deposits into a bank account are easy to count) Eevenue is a useful measurement of how large the operation was. There is some information about profit in the article: >The rent for one apartment was $3,225, but it was on Airbnb for $250 a night. Hypothetically, Mr. Beckman could cover a month’s rent by filling it with tourists for about two weeks. In just a few months, Mr. Beckman had booked more than 500 guests and generated about $84,000 from the building at 78 East 119th Street, according to the city’s lawsuit.
- zaroth 8y agoHaving stayed in AirBnB-type listings when traveling with my family, it’s clear to me that there is a huge market need for short term home rentals, and we should figure out how to do this without stomping on neighbors or pricing out locals in the process. There are a lot of positive externalities to families and larger groups coming to a city and spending their money. When I need 3 adjoining bedrooms and a space that will take dogs, a hotel is going to cost an absolute fortune in comparison or be actually impossible to find. Here’s to hoping there’s a happy medium to be found with the right combination of technology and regulation. For example, what about a condo bylaws which granted the right to rent a unit but with a 20% per night fee which goes to reducing condo fees for the rest of the building. There’s a reasonable number which covers the externality. As far as housing stock is concerned, that’s perhaps a trickier problem. I think it’s probably easier to quantify how many units are not available for a local rental and harder to quantify the economic positive value of the rental to locals, and so it’s an easy scapegoat for property prices which were probably overly high to begin with.
- brianwawok 8y agoHow though? What is the proposal to not hit NIMBYism? I am generally very liberal with what I think homeowners should be allowed to do. But an apartment or condo next to, or above mine with a rotating crew of guests? I shouldn't need to put up with that unless I agree to it in writing before starting my lease. There IS existing space marked out for hotels. If it were a profitable business, why has no one starting build hotel 'houses' to rent for visitors? The reason is IMO price, it would be very expensive to rent out a hotel "house". The reason the AirBnB is cheap is that you are making others eat your negative externalities (i.e. the guys under you get to deal with 2am stomping).
- dillondoyle 8y agoPlus I'm sure there are a lot of regulations for hotels in a city like NYC that probably cost a lot of money.
- beerlord 8y agoNo, the reason is that to-date there had not been a global platform available. AirBNB benefits from a massive global economy of scale. I can use the same platform in America, Germany, Australia, Bulgaria. First one to scale wins.
- Laska 8y agoAirbnb is amazing (ﾉ◕ヮ◕)ﾉ*:･ﾟ, wish work there someday, maybe ʕ ᵔᴥᵔ ʔ Well, anyway, if someone need a designer call me ٩(｡•́‿•̀｡)۶: dizayner.design@gmail.com